Intel has projected weaker-than-expected revenue for the second quarter as the chipmaker progresses plans to cut 20% of its workforce globally.
After reporting revenue of $12.7bn for the first quarter, which was flat year-on-year, Intel has forecast second quarter revenue of $11.2bn to $12.4bn, below analysts' estimates of $12.9bn.
Earnings per share losses doubled from $0.09 to $0.19 in Q1, and Intel projected that they would further widen to $0.32 in Q2. Intel made a loss of $800m for the quarter, and shares fell 6.4% in extended trading following the announcement.
The results follow reports of plans for Intel to cut a fifth of it global workforce, stoking fears for jobs at its Leixlip, Co. Kildare plant where the company employs almost 5,000 people.
Speaking on Wednesday, Minister for Enterprise, Tourism and Employment Peter Burke said that he and representatives of IDA Ireland continue to engage with Intel.
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"We have a very strong relationship with management in Intel, both in Ireland and the US, with the company investing significantly here over the last 35 years, most recently opening Fab 34 in 2023 with an investment of €17bn," said Burke.
"Ireland continues to play an important role in Intel's plans as the European hub for manufacturing semiconductors, and we don’t see speculation around headcount reduction changing this.
"We continue to partner with Intel in areas of research and innovation and our upcoming National Semiconductor Strategy launch will further enhance this important sector. I appreciate speculation is very difficult for staff in Leixlip, and we will continue our engagement with management over the coming weeks and months."
In a note to employees on Thursday, Intel CEO Lip-Bu Tan described the company's Q1 results as a step in the right direction, adding that the Q2 outlook was reflective of "an increasingly volatile and uncertain macroeconomic environment."
He continued by saying that Intel needed to make engineers more productive "by removing burdensome workflows and processes that slow down the pace of innovation" due to perceptions that the company is "too slow, too complex and too set in [its] ways."
He said it was necessary to further reduce costs following reforms to the company's cost structure last year, and that management had lowered the firm's 2025 targets for operating expenses from $17.5bn to $17bn and capital spending from $20bn to $18bn.
"As we refocus on engineering, we will also remove organizational complexity. Many teams are eight or more layers deep, which creates unnecessary bureaucracy that slows us down," Tan said.
"I have asked the executive team to take a fresh look at their respective orgs, with a focus on removing layers, increasing spans of control and empowering top performers. Our competitors are lean, fast and agile — and that’s what we must become to improve our execution."
He added that he had been surprised to learn that managers at Intel believed the size of their teams to become their most important key performance indicator in recent years. "Going forward, this will not be the case," he said.
"There is no way around the fact that these critical changes will reduce the size of our workforce. As I said when I joined, we need to make some very hard decisions to put our company on a solid footing for the future. This will begin in Q2 and we will move as quickly as possible over the next several months."
Intel employs around 108,900 people around the world, including 4,900 in Leixlip and a further 300 at its Shannon, Co. Clare plant, which will close later this year.
In his memo, Tan said he had instructed management to cut unnecessary meetings and announced that employees would be required in the office for four days per week from September.
Intel employs nearly 5,000 people in Ireland. (Pic: Jonathan Raa/NurPhoto via Getty Images)
“It was a solid start to the year as we executed well on our priorities,” said Intel CFO David Zinsner of the Q1 results. “The current macro environment is creating elevated uncertainty across the industry, which is reflected in our outlook.
"We are taking a disciplined and prudent approach to support continued investment in our core products and foundry businesses while maximising operational cost savings and capital efficiency.”
